The Nationwide Building Society has reported that house prices in May 2021 were up 1.8% month-on-month, following a 2.3% rise in April.
The annual house price growth rose to 10.9%, the highest level since 2014.
This means there is a new record average price of £242,832, up £23,930 over the past 12 months.
Robert Gardner, Nationwide’s chief economist, said: “The market has seen a complete turnaround over the past 12 months. A year ago, activity collapsed in the wake of the first lockdown with housing transactions falling to a record low of 42,000 in April 2020. But activity surged towards the end of last year and into 2021, reaching a record high of 183,000 in March.
“While March’s spike in transactions was driven by the original end date of the stamp duty holiday, a lot of momentum has been maintained. Our research indicates that the extension to the stamp duty holiday is not the key factor, though it is clearly impacting the timing of transactions.
“Amongst homeowners surveyed at the end of April1 that were either moving home or considering a move, three quarters (68%) said this would have been the case even if the stamp duty holiday had not been extended. It is shifting housing preferences which is continuing to drive activity, with people reassessing their needs in the wake of the pandemic.
“At the end of April, 25% of homeowners surveyed said they were either in the process of moving or considering a move as a result of the pandemic, only modestly below the 28% recorded in September last year. Given that only around 5% of the housing stock typically changes hands in a given year, it only requires a relatively small proportion of people to follow through on this to have a material impact.”
Jonathan Hopper, CEO of Garrington Property Finders, added: “Records are melting in the white heat of the property market’s boom. Estate agents in desirable rural and coastal areas continue to be deluged with enquiries and prices are spiking.
“The Nationwide’s double-digit reading of the annual pace of price growth is no fluke – the official Land Registry data is similarly frothy. Crucially the Nationwide’s data gives a more up to the minute picture of price trends, and it’s clear the influence of the Stamp Duty holiday is falling away.
“Many buyers are making fundamental changes to the way they live and work, and the vanishing prospect of a Stamp Duty saving is now no more than a catalyst, a reminder that the time has come to move.
“The Nationwide’s survey shows a third of buyers want to relocate to a different area and 30% want access to a garden or outdoor space.
“As a result the market in many areas remains largely sentiment-led, disconnected from the wider economy and with many buyers purchasing with their hearts not their heads.
“With the supply of homes for sale still far short of buyer demand, house price inflation is set to stay in the eye of a perfect storm for a while yet.
“But with average wages still barely budging for many people, the affordability gap is widening – and sooner or later it will bite.”
